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Apple’s Stock: Predictable Patterns? Or, Outright Manipulation?

Monday, August 10, 2015

Anyone who follows Apple as a company probably follows AAPL, too. Few stocks of such large technology companies are as volatile as Apple, despite the company’s continued growth and market dominance. Google, Microsoft, and Amazon have fared better recently despite the former two and their inability to diversify from their core business, and the latter’s inability to turn a profit or dominant online retailing anywhere except in the U.S.

That brings me to AAPL. Yes, the company announced record revenue and profits in the past quarter. Again. And, yes, the stock market beat AAPL down. Again.

What’s the reward for being the most visible technology company with the highest market capitalization and an incredibly black balance sheet? Fear, uncertainty, and doubt among the investment community. Yet, what is happening now with AAPL seems to have been repeated ad nauseam for years.

Since the company’s last earnings report– again, record levels– AAPL has dropped about 12-percent. Why? This time analysts are blaming it on the same old ghosts of Apple past. Growth roadblock, Chinese economy, Watch, too much dependence upon iPhone for growth and profits.

However, over the last few years, Apple has often seen volatility in the roughly seven weeks between its summertime earnings report and its iPhone-related shindigs. Almost every time, these periods have ended with Apple’s stock price recovering and setting the company up for more gains into the end of year.

In other words, there’s a pattern, and savvy stock investors take note of patterns and then buy and sell accordingly. Wall Street may say the prefer companies with stability and steady growth and earnings, but they make money on volatility, and in the past 10 years few major stocks have made as much money for investors as AAPL.

So, predictable patterns are a good thing, but are those patterns part of a larger scheme which borders on manipulation?

Jeff Sica:

Apple’s stock has always fluctuated because of the exuberance and attention the company gathers. With a stock like Apple, investors and analysts always want to assign blame or credit for every swing in price. Sometimes you need to let the fluctuations take place and respond accordingly.

Does that mean investors should simply wait out these volatile fluctuations? Or, look for the highs and lows and invest in AAPL accordingly? The problem I see is a secondary pattern which I’ll describe as ‘the rich get richer.’ Savvy investors don’t appear to care much about the emotion of the market; fears, uncertainties, and doubt associated with AAPL. Instead, they buy and sell on the patterns, and as long as Apple remains predictable– both in financial performance, and investor FUD, well, the rich get richer.

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